Inclusive Innovation for Inclusive Growth

World Bank advises China on development of an inclusive innovation strategy

BEIJING, December 12, 2013 – As inclusive innovation can expand poor people’s access to basic goods and service, a new report advises policymakers to develop a strategy to promote inclusive innovation in China. Inclusive innovation is any innovation that leads to affordable access to quality goods and services for the poor on a sustainable basis and with extensive outreach.

Inclusive Innovation for Sustainable Inclusive Growth, a joint study by the World Bank and the State Information Center (SIC) of China, aims to help build awareness and set the stage for the potential implementation and operationalization of inclusive innovation policy in China. The report introduces the concept of inclusive innovation and its relevance for China, discusses the country’s current landscape for inclusive innovation, presents international experience and examples, and outlines some policy options for consideration by the Chinese authorities.

"Inclusive innovation is of high relevance for China, but the concept is only now recognized,” said Klaus Rohland, World Bank Country Director for China. “While China has emphasized frontier innovation so far, more efforts can be made in pursuing inclusive innovation to address the increasing disparity in access to basic goods and services.”

An “inclusive innovation strategy” is a set of policies that connects excluded populations to a nation’s innovation system. It complements frontier innovation by increasing the purchasing power and enhancing income-generating opportunities for the poor population.

"Inclusive innovation will be an important complement to China’s national innovation system. It is crucial to the bottom-up approach of indigenous innovation,” said Pu Yufei, Director-General of SIC’s Comprehensive Management Department.

Public support should focus on the creation of a functioning innovation infrastructure. The role of the government should be to facilitate, support, incentivize and leverage the strengths of all stakeholders in order to create sustainable inclusive solutions with significant outreach at maximum efficiency with the least possible burden on the public resources. Contributions from the private sector, the research and academic community, NGOs, and global partnerships – as well as the poor population itself are essential to an effective inclusive innovation system.

"China has a strong enabling environment for inclusive innovation. But it also needs to expand in scope, coverage, quality, and efficiency to sufficiently serve other disadvantaged groups such as migrant workers,” said Wang Jun, World Bank Lead Financial Specialist and task team leader of the report. “As the key provider of public services, the government could benefit from pursuing a well-articulated inclusive innovation strategy and use inclusive innovation as a powerful tool to significantly reduce the burden on the fiscal budget and improve the supply of affordable quality basic goods and services,” he added.

The report lays out some potential options for the public policy interventions including:

An integrated national inclusive innovation policy and required institutional systems;

A facile regulatory system and supportive public procurement policy;

A dedicated fund to support inclusive innovation including private risk capital for pro-poor solutions;

Incentives to leverage strengths and comparative advantages of all stakeholders, especially the private sector;

Mandates for public research system to channel the very best technical and scientific expertise towards inclusive innovation;

Dedicated support to grassroots innovators to deepen and expand their innovation capacity;